ELI5: Explain Like I'm 5

counterparty risk

Counterparty risk is the risk that someone you do business with might not be able to live up to their end of the deal. It's kind of like when you make a promise to a friend to do something, but you can't do it because something bad happens. In business, counterparty risk happens when one side of a deal doesn't do what they say they will do, so the other side doesn't get what they were expecting.